Latam Countries Prepare Regional Agreement to Counter Rampant Inflation – A group of Latin American countries is planning a collective approach to one of the region’s most important problems: inflation. Argentina, Brazil, Colombia, Cuba, and Mexico are preparing to sign an agreement to combat inflation, according to Argentina’s president, Alberto Fernandez, in an interview with the Argentine media outlet Ambito.
Fernandez added that the initiative was proposed by Mexican President Andres Lopez Obrador, who called him to enquire about various approaches to mitigate the effects of rising costs on the region’s economy. There have already been discussions regarding how to arrange this system with Brazil’s President Luiz Inacio “Lula” Da Silva, Colombia’s President Gustavo Petro, and Cuba’s President Miguel Diaz-Canel.
People Also Read: US Treasury and White House to Hold Regular Meetings on CBDCs and Payment Innovations
The Argentine president stated that a conference will be held on March 17 to finalize the new agreement and the roles that each country will play in it. The agreement’s structure is already being organized by the countries’ ministers.
While the inner workings of this anti-inflation mechanism are still unknown, Fernandez provided a concise sketch of it. The deal would establish a sort of clearing system to facilitate the rapid exchange of products across countries, with a focus on those with extraordinary rising prices.
For example, if clothing prices rise in Argentina, the country may seek to import it from another member in the group in exchange for raw materials or commodities such as soy. According to Fernandez, the aggregate benefit of such a mechanism is that participating countries would not have to settle these transactions in dollars.
People Also Read: Brazilian Digital Real Passes Public Blockchain Pilot Test
Argentina has the highest levels of inflation in the group, with an over 100% increase in prices documented in 2022 and a devaluation process that has reduced its fiat currency, the Argentine peso, to historic lows. Inflation in Cuba and Colombia was similarly significant, with increases of 39% and 13.1%, respectively.